Lactalis-Nestlé manages volatility in chilled dairy

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Lactalis-Nestlé: jv in chilled yogurts and desserts

Lactalis-Nestlé, the joint venture between the French dairy company Lactalis and Nestlé in chilled yogurts and desserts in Europe, has integrated demand and supply to collaborate with retailers to meet customer needs and minimise waste.

Presenting at the IGD Supply Chain Summit 2010, James Lancaster, supply chain director at Lactalis-Nestlé, revealed the challenges in the chilled category versus ambient.

According to Lancaster, 70% of the sector’s volume is sold on promotion, while products have a short shelf. Promotional activity means retail demand can spike and increase from 500 cases per week per retailer to 30,000-40,000 cases per week.

“Price drives footfall in store and traffic through the aisle,” he said. And, if other retailers follow suit there can be huge volatility, he added.

As a result, forecasting is complex and the company has restructured in order to meet business needs, maximise service levels and protect finished goods waste.

Lancaster said the company had split multi-disciplined planners into demand and supply teams with an overlap zone to prevent them operating in silos.

It put the right people in the right roles and the customer at the forefront of its thoughts, he said. Lactalis-Nestlé also invested in getting closer to the customer to achieve better quality inputs into its forecasts.

Processes were increasingly transparent, he said.

“What a retailer hates the most is a surprise.”

The company spends time analysing and mining the available data to interpret into actions.

“We know the retailers, their customers and drivers and send people into store on a regular basis to see competitor activity – we don’t wait to make changes,” he said.

Lancaster emphasised the importance of education and reported the company regularly sends the planning teams to the company’s production facilities in France and production staff visited the UK.

He revealed the company had achieved a 10% improvement in availability in two years, service levels had moved from 98.6% to 99.6% and waste had been cut by 70%.

Lancaster concluded with five tips for collaborative success:

  1. It’s about people as well as planning
  2. Invest in face time with retailers
  3. Make data your friend
  4. Don’t plan in silos
  5. Educate stakeholders